Consistent with United Nations Security Council Resolution 1718 of October 14, 2006 calling on member states to impose sanctions on North Korea, on December 7, 2006 President Bush issued a Determination that North Korea had detonated a nuclear explosive device on October 9, 2006 and directed all agencies to take specified actions, including a restriction on the export of "luxury goods" to North Korea. Implementing this Determination, effective January 26, 2007, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) imposed a new export licensing requirement for exports and reexports to the People’s Democratic Republic of Korea (North Korea).

New Export License Requirements

Effective January 26, 2007, a license is required for the export or reexport to North Korea of any item subject to the EAR, except for food and medicine. The EAR has also been amended to reflect a general policy of denial for "luxury" items exported or reexported to North Korea unless such luxury items are for humanitarian activities or that serve basic subsistence needs.

Items on dock for loading, on lighter, laden aboard an exporting carrier or en route to a port of export on January 26, 2007 remain subject to the licensing rules that were applicable on January 25, 2007. However, such items not actually exported or reexported before midnight on February 9, 2007 may be exported or reexported only if authorized pursuant to the new licensing requirements.

Export Prohibition on U.S. Products

On a case-by-case basis, BIS will determine which items qualify as "luxury items." In part, BIS will make this determination based upon the end use and the end user. For example, a laptop computer going to a North Korean government official likely will be deemed a luxury item, while the same item going to a humanitarian organization in North Korea likely will not. In the new regulations, BIS published the following list as illustrative examples of luxury items:

  • Luxury automobiles
    		•
  • Jewelry
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  • Gems
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  • Cosmetics
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  • Other fashion accessories
    		•
  • Furs
    		•
  • Perfumes
    		•
  • Luxury watches
    		•
  • Designer clothing
    		•
  • Electronic entertainment software and equipment
    		•
  • Rugs and tapestries
    		•
  • Tobacco
    		•
  • Recreational sports equipment
    		•
  • Musical instruments
    		•
  • Wine and other alcoholic beverages
    		•
  • Antiques and collectable items, including but not limited to rare coins and stamps
    		•
  • Art
    		•  
  • Yachts
    		•  

    Prior to the new restrictions, North Korea had been designated as a country supporting acts of international terrorism. North Korea continues to be subject to strict anti-terrorism export controls and export license requirements, including a denial policy for any item that could contribute to North Korea’s weapons of massdestruction related programs.

    Exceptions to Denial Policy

    Case-by-case Review

    All license applications will be subject to a presumption of denial except for the following items, which will be considered on a case-by-case basis:

    • Items not on the CCL (EAR99) that are determined not to be luxury items.
    • Aircraft parts and components for safety of flight purposes.
    • Laptop computers and luxury automobiles if those items are being exported or reexported to legitimate humanitarian organizations or items in support of activities of the U.S. Government.

    Approval Policy

    BIS will apply a general policy of approval for items to be used for humanitarian purposes, which are intended for the benefit of the North Korean people. Examples of humanitarian items include blankets, basic footwear, medical supplies, heating oil and other items meeting subsistence needs. Other items subject to a policy of approval are items in support of UN humanitarian efforts, and agricultural commodities or medical devices that are determined by BIS not to be luxury goods.

    No License Required for Food and Medicine

    As noted above, exports of food and medicine not listed on the CCL (EAR99) do not require a license and may be exported and reexported to North Korea without written BIS authorization. "Food" and "medicine" are defined as follows:

    • Food – items that are consumed by and provide nutrition to humans and animals, and seeds, with the exception of castor bean seeds, that germinate into items that will be consumed by and provide nutrition to humans and animals. (Food does not include alcoholic beverages).
    • Medicine – prescription and over the counter medicines for human and animals.

    Certain License Exceptions Available

    Only the following License Exceptions (or parts thereof) are available for North Korea:

    • TMP – (EAR § 740.9(a)(2)(viii)) for items for use only by the news media.
    • GOV – (EAR § 740.11(a), (b)(2)(i) & (ii)) for items to IAEA, Eurotom and for personal or official use by personnel and agencies of the U.S. Government.
    • GFT – (EAR 740.12) for the export or reexport of gift parcels not containing luxury goods by an individual to an individual, religious, charitable, or educational organization; and for the export or reexport of gift parcels by groups or organizations of certain donations to meet the basic human needs of North Korean people.
    • TSU – (EAR § 740.13(a) & (b)) for operation technology and software and sales technology.
    • BAG – (EAR § 740.14(a) – (d)) for exports of items as personal baggage (except shotguns, shells and encryption items).
    • AVS – (EAR § 740.15(a)(4)) for reexports of civil aircraft on temporary sojourn to North Korea.

    In light of the new regulations, transactions with North Korea involving products classified under EAR99, which previously were legal, are now prohibited without a license. U.S. companies and foreign companies that distribute U.S. products should ensure that their international distribution networks are brought into compliance with the new regulations.

    The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.